Table 14-3 Karl Can Produce Either 10 Tonnes of Oranges or 5

question 108

Multiple Choice

Table 14-3
Karl can produce either 10 tonnes of oranges or 5 tonnes of apples in a year, while Adam can produce either 5 tonnes of oranges or 10 tonnes of apples.
-Refer to Table 14-3.If the exchange rate between apples and oranges in international markets is 1 tonne of apples per 3 tonnes of oranges,how will this affect trade between Karl and Adam?

• A)Karl and Adam will trade apples and oranges with one another.
• B)Karl and Adam will not trade apples and oranges with one another, since both will specialize in and export oranges.
• C)Karl and Adam will not trade apples and oranges with one another, since both will specialize in and export apples.
• D)Karl and Adam will not engage in international trade.

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Definitions:

More Inelastic

Describing a situation where the demand for a good or service is less sensitive to changes in price, indicating consumers are less likely to reduce their quantity demanded as the price increases.

Elastic Demand

A situation in which the quantity demanded of a good or service significantly changes in response to a change in price.

Close Substitutes

Products or services that can easily replace one another in usage or consumption.

Demand Curves

Graphs showing the relationship between the price of a good and the quantity demanded by consumers, typically downward sloping.